Breaking the Cycle of Famine

The famines in East Africa and elsewhere make food a critical issue in 2011. Small, import-dependent countries, particularly in Africa, are especially at risk, with many of them still facing severe problems following the world food and economic crises of 2006-2008. Much of East Africa is in crisis and the current famine is not its first. In some places this is the worst drought in 60 years. The result is that 13 million people at now risk and 1.8 million people have been displaced in Somalis alone.

Although aid agencies are doing what they can, we need to find better solutions than post hoc assistance. It cost less to avoid a crisis than it does to save lives after famine hits. Experts estimate that emergency relief in famines costs seven times as much as preventing the disaster to begin with.

As journalist Tina Rosenberg wrote in The New York Times earlier this year, “Out of fear, farmers do not try new methods that can bring them higher yields. They cannot take out loans to buy the drought-resistant seeds and tools to bring a bigger harvest, because they cannot be sure of repaying the loans. They need to know they will have money left over to feed their families and plant again should the harvest fail, so they invest less in farming. “

Recognizing this, several years ago Oxfam launched a program in Ethiopia to try to break this cycle, This insurance product is designed to be commercially viable (i.e., risk-based pricing) and to avoid subsidizing premiums as has been done in the past.